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JOSEPH MOSNIER:

Tell me a little bit about the early phases of your being drawn more directly into the top tier of the bank's leadership, maybe the evolving relationship with Mr. Watlington, with Mr. Davis. How those few years evolved that would lead in the early '70s to your being named to top posts.

JOHN MEDLIN:

Well, I guess in 1970, I was named Executive Vice President, put in charge of basically all lending for the company. I was the Executive Vice President reporting to the Chief Executive Officer in charge of lending. It was called the funds management division. The name didn't cover quite all. But it was consumer lending, commercial lending, mortgage and the whole business as well as managing the bank's investment portfolio to balance interest rates sensitivity and so forth. It was a very treacherous time. Again, this conflict between the worries about what took place in the '30s and the promiscuous lending. Yet you had to do things to be competitive and to serve the customers and the public interest. There was a time of great turbulence there and policy change in banking that took place as I became the head of lending in effect at Wachovia. Trying to arbitrate that change and present it to the top management and to the Credit Committee and forums like that that had to make big policy changes. It was a challenge to take more risk and to be more progressive and open and doing things, but not so much that it got you in trouble. I think that was the great challenge of our generation. The previous generation had said, 'We are not going to take much risk and therefore we won't get into trouble.' We recognized we had to take more risk, but we had to do it intelligently and based on facts and based on good empirical evidence that could stimulate change. It's the one thing I think that distinguished Wachovia through that transitional period. The banking crisis of 1974 was the most serious one I think in North Carolina and the Southeast since the Depression. There were banks that couldn't fund themselves some days. One noble major one, NationsBank, which has been publicly acknowledged and finally got funding overseas and in New York. Wachovia walked that tight rope between doing too little and too much and was a beacon of light and a pillar of strength during that time when other banks got into difficulty and a number failed. So I think it was orchestrating that policy change and perhaps us younger people were being pulled back somewhat by these old timers who were still basically in charge. Although in 1974 I was made President and Chief Operating Officer and got one step away from the throne I guess you would say. But still the major policy decisions were being made above me.

JOSEPH MOSNIER:

Tell me a little bit about, just to draw you out a little bit more on this issue of navigating those years in the early '70s and those years around '74. Can you sketch your recollection of the bank's board in those years and that generational issue, how it was playing out in the board among the board whom I would presume at that point would have been persons a generation mostly ahead of say you at the time.

JOHN MEDLIN:

The board consisted of people who were peers and of the generation of the top management who had basically grown up, had started doing business in the '30s or after World War Two. They were a little more conservative, to put it that way. Except that there were a few who were I think that had the vision of younger people and were more willing to step out and take risk and to effect change. So I think it was to some extent that, calling it a battle is too strong of a word, but that transition from the old to the new took place on the board also. Gradually younger people came on the board as older ones retired. People who by the late '70s that were younger and of a similar mind that change needed to take place.

JOSEPH MOSNIER:

Lessons you drew from the '74 experiences.

JOHN MEDLIN:

A confirmation I guess that the way we were approaching it was the right way. That we had not strayed. We had loan problems like everyone else, but at least the quantity and magnitude of them was not serious as to be threatening to the company. But the lessons I think that we had an obligation to not do extreme and take too much risk because often we saw people who were permitted in fact encouraged in some ways to get in trouble by their banks being too liberal with their lending particularly in the real estate area.